Is the Banking Crisis Over? - Hell No

Andrew linked to this Time article late last week:

Banks became the visible and ugly wound that reminded Wall St. each day that it had torn down what it spent decades building, which was a money-making machine driven by leverage and the cleverest synthetic financial instruments the world has ever seen.

But, the great banking crisis of 2008 is over. It began last September 15 when Lehman Brothers filed for bankruptcy and bottomed when Citigroup (C) traded below $1 last month.

The author seems to equate the apparent bottom of banking stocks with the banking crisis, two very different things. He then backs up his argument by pointing to the Wells Fargo earning surprise that was announced last week:

All of those plans, no matter how well-intentioned they may seem, are unnecessary now. Wells Fargo (WFC) indicated that it made about $3 billion in the first quarter of the year and declared its buyout of the deeply troubled Wachovia to be a success. Wells Fargo (WFC) said that the low cost of money from the government combined with a surging demand for mortgages was all the medicine that it required.

Banks stocks reacted to the news, which took the markets completely by surprise, by driving up Wells Fargo's stock by 32%. Bank of America (BAC) shares jumped 35%.

Oddly absent from the discussion of how well Wells Fargo did is why the government was in the midst of testing bank balance sheets at all. The experts at the Treasury had been thrown off the scent and consequently had missed the fact that there was not need to test what is already working well.

Again, and I hate to be the bearer of bad news, but the banking crisis is nowhere near over. Wells Fargo has been the best positioned bank throughout this crisis, to use them as an indicator for an overall banking recovery is wishful thinking.

Considering two banks failed the day the article came out, I wouldn't bet on the author.